Issue with Development team for a app based startup when 90 percent payment is done

Issue at hand: The Development team has stopped the development process, asserting that certain tasks completed after signing the contract in March 2022 fall outside the agreed scope, meaning they were additional tasks not initially covered in the contract (Added in attachment for Reference). The Development team claims they haven't been compensated for this additional work. They have offered two options: either deliver the in-scope items within 30 business days or provide the entire code as it stands, but this is contingent on the Client paying for the out-of-scope work, for which the Development team has presented a bill (Added in Attachment for Reference). However, the current code is plagued with numerous bugs and suboptimal coding practices, rendering it consistently unusable. Consequently, the Client intends to terminate the development process and seek an alternative solution elsewhere. The Development team did not intimate the Client at any time before building this code in the application during the development process that these are additional and out-of-scope work, while they have brought some items as additional billables and after mutual agreement the additional cost has been agreed to be paid by the Client at the time of delivery. In response, the Client has chosen to pursue a legal resolution regarding the out-of-scope claims in court. The Development team maintains that they have full ownership of the code and the liberty to use it as they see fit. The Client has requested that the Development team delete the out-of-scope code, as per the Development team's definition, but the Development team has not only refused this request but also retracted their offer to provide the in-scope code, insisting they will only deliver the complete code upon receiving full payment. The Development team argues that they cannot continue incurring losses on this project. The Client's proposed final resolution is to obtain the in-scope code while having the out-of-scope items (as defined by the Development team) removed, as these were created using the Client's resources and ideas. Alternatively, the Client suggests waiting for the court's decision on the validity of the Development team's out-of-scope claims and then implementing the court's verdict regarding code ownership and disposition. The proposed resolution has been conveyed to the Development team, and the Client is currently awaiting their response. The Client has also reached out to the Development team to schedule a meeting to expedite the process since the delays have extended the originally anticipated three-month timeline to nearly two years.